Author: Rumiko Inoue (sales and marketing leader of Yumoto Vietnam)
China has been a key manufacturing hub, and many companies around the world have relied on China for sourcing CNC machined precision components. However, recent developments such as COVID-19 and the US tariff policies in Trump’s first and current second administration have led to major disruptions in the China-global supply chain, and more and more companies are looking for an alternative supplier. Vietnam has emerged as the top contender to become the next global manufacturing hub, not Thailand, Malaysia, and other Southeast Asian countries. Why is that the case? We will explore this reason from our experience as a CNC precision parts company based in Vietnam.
The reason Vietnam suppliers are selected boils down to their ability to manufacture high quality precision components that meet global standards while maintaining low cost during production.
1. International quality systems: Most CNC machined parts suppliers in Vietnam have their quality systems certified by international standards. Being ISO9001-certified is now considered the norm in Vietnam.
Yumoto Vietnam is a CNC machining service company with ISO9001:2015 certification.
2. Strong manufacturing leadership trained in Japan or other countries with the highest manufacturing standards: Many CEOs and founders of CNC machining companies in Vietnam have worked abroad, most of them in Japan which is renowned for their monozukuri spirit. They have been trained by the best of the best in the manufacturing world for many years before returning to Vietnam to open their own factories.
Mr. Nguyen Van Nam (left) worked in Yumoto Electric in Osaka, Japan as a CNC machining engineer for about 7.5 years, before returning to Vietnam and becoming Yumoto Vietnam’s production manager. He was one of the top engineers while working in Japan and has JLPT-N2 Japanese level.
3. Highly skilled and educated young workforce: Currently, Vietnam has a large young working population. According to the UN Department of Economic and Social Affairs World Population Prospects 2024 report, the median age in Vietnam is 32.9 as of July 1, 2024 (and the expected median age for 2025 is 33.4 years). This is much lower than Thailand’s median age which is 40.6 years. Not only is the working force young, but they are also highly educated. According to World Top 20 Education database, Singapore leads at the top in South East Asia with 11th place in the global ranking, and Vietnam comes second in South East Asia with 53rd place. Then comes Philippines (71st), Malaysia (89th), Laos (102nd), and Thailand (107th).
Mr. Cuong (center left) and Mr. Tan Minh (center right) are one of Yumoto Vietnam's young talented CNC machining engineer under 20. Both studied at Long An College (LAC) and completed an internship at Yumoto when they were still students. They started working officially at Yumoto right after graduating, and after only just about two years, they are now one of the most skilled engineers contributing to the growth of the company. In 2024, they were awarded most efficient engineer by shortening machining time of the order and ensuring the shipment was completed ahead of the customer's requested deadline.
The average age at Yumoto Vietnam is about 25 years old.
1. Relatively low labor costs: While Vietnam’s average salary and cost of living is increasing every year, the labor cost is still low compared to other Southeast Asian countries. The World Bank data from 2024 classifies Vietnam in the lower-middle income economies ($1,136~$4,495), whereas Malaysia and Thailand fall under the upper-middle income economies ($4,496 to $13,935). A skilled CNC machining engineer in Vietnam may earn a salary of $1,000 per month or more, while entry level engineers often start around $200~$300 per month. Machining hourly rate may range from $8 for simple machined products to $25 for more complex parts, such as those that may require 5-axis milling.
2. Growing supply chain in the supporting industries: Vietnam has a strong and growing local network of supporting industries that helps lower production costs for CNC machined precision components. About more than ten years ago in Vietnam in early 2000s, there were only a few plating and anodizing companies, but now CNC machining companies have a wide range of surface treatment suppliers they can work with. There are also many more raw material suppliers that import frequently used material in large quantities from Japan, Korea, India, China and other countries and can sell cut sheets and rods in small quantities at lower cost.
Yumoto Vietnam's material warehouse storing commonly used materials for CNC machining such as POM, MC Nylon, and A5052.
3. Developed logistic sector that provide competitive shipping costs. Vietnam’s logistic sector has developed significantly, with a healthy competition that lowers costs for manufacturers to ship products globally. Depending on the lead time, quantity, and gross weight of products, manufacturers can choose from a wide range of shipping options (courier, air cargo, ocean freight) and select companies with the best rates. For example, courier services are usually the go-to option for shipments that weigh less than 100KG, but air cargo will become the more affordable option after 100 KG. Air courier to Japan for 50 kilograms may cost around 7.50 USD per kilogram whereas air cargo for shipments of 100 kilograms or more starts at around 3.20 USD per kilogram.
Yumoto Vietnam frequently uses shipping services of the above companies to send CNC machined components within Vietnam and abroad such as Japan, the US, and Europe.
1. Unpredictable global economic situation: The US has announced a 20 percent reciprocal tariff rate on all Vietnamese goods in mid-2025 hiking up prices of precision parts exported to the US. Trade situation is still unpredictable, and changes in trade policies and tariff rates may affect the competitiveness of Vietnam’s CNC machining industry.
2. Limited made-in Vietnam raw material: Vietnam still imports most of its raw material from China and other countries, such as Japan, Korea, and India. While common materials such as POM, MC Nylon, A5052, A6061, SS400, S45C, and so on are imported in bulks by material suppliers to reduce costs, many materials such as hard-to-machine materials (molybdenum, Hastelloy, tungsten), special steel or aluminum grades, some engineering plastics (PBT, PPS, PA66…) are not readily available in Vietnam. When CNC machining companies import these materials in small quantities, the material cost can be high and reduce price competitiveness of the precision components.
3. Unavailable surface finishing options: While most common surface finishing options including anodizing, electroless nickel plating, Alodine, black oxide, and so on are available, some surface finishes (e.g. vapor polishing for transparent plastics, uncommon mixed alloy plating) are still not available in Vietnam, but are available in countries with developed supply chains such as China and Japan.
While challenges remain in Vietnam, such as limited availability of certain raw materials and susceptibility to fluctuating trade policies, Vietnam is on its way to becoming the next world manufacturing hub. With its strong balance of high-quality production and low-cost CNC machining, Vietnam stands out as one of the most attractive and reliable “China+1” options for sourcing CNC machined precision components.
Looking for a reliable CNC machined precision parts supplier in Vietnam? Learn more about Yumoto Vietnam’s CNC machining service here and contact our sales representatives for your next project. We can provide high Japan quality precision components at a competitive rate with an average lead time of under two weeks. Our sales team will get back to you within 24 hours after you send us an inquiry.
